Co-ordinatingmandated lead arrangers ABN Amro and Merrill Lynch are hoping to close the US$1.5bn acquisition bridge financing facility for the Russian mining and metals firm Mechel very soon. The facility is presently in senior sub-underwriting phase, with deal set to be wrapped up in early May, although no official date has been set.

The facility is being raised for the intended acquisition of Oriel Resources, a London-based chrome and nickel mining and processing company listed on the AIM of the London Stock Exchange (LSE).

The 12-month bridge loan carries an initial margin of 2.6% over Libor per year, increasing to 2.9% for the remaining six months. The plan is that Mechel will refinance the loan via its planned IPO of the mining division.

Those working close to the deal are generally happy with the reaction the loan has received in the market. This particular facility is unusual as it only has two co-ordinating MLAs, a set-up that is very rare in the current syndications market with many banks reluctant to take big tickets on transactions. Most deals coming out on to the market are extremely top heavy, sometimes featuring as many as 14 banks as mandated lead arrangers, as seen on the recent oversubscribed US$3bn pre-export credit facility for Russian oil company Rosneft.

Some observing the syndication process have commented that the deal has struggled very slightly to attract lenders, particularly for the larger tickets available. However, given the strength of the company's reputation and its buoyant share price, the deal still holds a lot of appeal. Mechel has also attracted a number of strategically important coal assets, and with the price of coal soaring, the company is well-positioned to build on its recent acquisitions.

The borrower was last in the market at the end of 2007 with its debut syndication, closing a US$2bn acquisition refinancing package, including a US$1.7bn classic pre-export facility. That transaction featured seven mandated lead arrangers. (Click here to read more about Mechel's debut loan in Mar/April GTR 2008).